Ruth’s Rubies is a single-price monopolist in the market for rubies. Suppose Ruth’s Rubies currently charges $200 for its rubies (i.e. sells 3 rubies). If it lowers the price to $100 (to sell 4 rubies), how large is: the quantity effect? the price effect? Price of a Ruby Quantity of Rubies Demanded Total Revenue Marginal Revenue $500 0 400 1 300 2 200 3 100 4 0 5

Ruth’s Rubies is a single-price monopolist in the market for rubies. Suppose Ruth’s Rubies currently charges $200 for its rubies (i.e. sells 3 rubies). If it lowers the price to $100 (to sell 4 rubies), how large is: the quantity effect? the price effect? Price of a Ruby Quantity of Rubies Demanded Total Revenue Marginal Revenue $500 0 400 1 300 2 200 3 100 4 0 5

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.7P

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c. Explain why demand for Carmel cigarette tend to be more inelastic in the short run than in the long run. d. XYZ company specializes in supplying online sofa bed and wish to increase its total revenue. Based on the online data, XYZ company knows that its customers can be divided into two distinct markets: West coast Malaysia (WCM) and East coast Malaysia (ECM). The following table shows how the two regions respond to a 30% rebate: Volume of sales before West coast Malaysia East coast Malaysia the 30% rebate (sales per month) (sales per month) 500 300 Volume of sales after the 30% rebate 2000 400 į Using the midpoint method, calculate the price elasticities of demand for both regions. ii. If XYZ company wants to boost its sales and income, should the rebate be offered to West coast Malaysia or East coast Malaysia, or both regions, or neither regions? Justify your answer.
Problem two: E-levy and elasticity of demand for electronic transaction services Consider the following facts about mobile money transactions. Currently, MTN and Airtel Tigo charge 1% on mobile money transactions up to a total charge of GHS 10 per transaction while Vodafone charges 0%. The government introduced E-levy which took effect 1st May, 2022 imposed an additional 1.5% charge on most electronic transactions. a) In ordinary language, explain what it means to say the demand for mobile money transactions is price elastic. 2 b) A deputy minister of finance has suggested that the introduction of the E-levy will reduce mobile money transactions by 24%.¹ Based on this and information in the preamble to this question, is the demand for mobile price elastic or price inelastic? Does your answer depend on which mobile network one is using? c) What does your answer in part (b) imply about the likely amount the government can realize about the E-levy? (Hint: calculations are not needed here.…
7. A model of price discrimination Kevin owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on his property, making a large crater. The event attracts scientists and tourists, and Kevin decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists (Market A) and tourists (Market B). The following graphs show daily demand (D) curves and marginal revenue (MR) curves for the two markets. Kevin's marginal cost of providing admission tickets is zero. Market A Market B 20 20 18 18 16 16 14 14 12 12 10 10 8 8 6 4 4 2 2 MR `A. A MR, B PB 1 2 3 4 5 6 7 8 10 1 2 3 4 5 6 7 8 9. 10 QUANTITY (Admission tickets) QUANTITY (Admission tickets) Suppose that at first, Kevin charges the same price of $8 per admission in both markets so that the total number of admissions demanded is tickets. PRICE (Dollars per ticket) co PRICE (Dollars per ticket)
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The demand function for SkanDisc 2GB thumb drives is given by p- 4(x + 3) e"/a where p is the wholesale unit price in dollars and x is the quantity demanded each week, measured in units of a thousand. Compute the price, p, when x 6. Do not round your answer. Price, p- 36e dollars Use implicit differentiation to compute the rate of change of demand with respect to price, p, when x- 6. Do not round your answer. Rate of change of demand, x' x thousands of units per dollar Compute the elasticity of demand when x - 6. Do not round your answer. Elasticity of Demand-
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I have filled in al the mathematical answers / just need graphs that are bold with asteriks The following relations describe monthly demand and supply for a computer support service to small businesses: Qd = 3000 - 10P Qs = -1000 + 10P Where Q is the number of businesses that need services and P is the monthly fee, in dollars. At what average monthly fee would demand equal zero? Qd = 3000 – 10P 0 = 3000 – 10P 10P = 3000/10 P = $300 At what average monthly fee would supply equal zero? Qs = -1000 + 10P 0 = -1000 + 10P -10P = -1000 P = 1000/10 P = $100 ***Plot the supply and demand curves. What is the equilibrium price/output level? We know at equilibrium, Qd = Qs 3000-10P = -1000+10P 3000 + 1000 = 10P + 10P 4000 = 20P 4000/20 P = $ 200 (Equilibrium Price) If P = $200 Qd = 3000 – 10(200) Qd = 3000 – 2000 Qd = 1000 units (Output level) Qs = -1000 + 10(200) Qs = -1000 + 2000 Qs = 1000 units (Output level) Suppose demand increases and leads to a new demand curve: Qd = 3500 -…
01 Question Hugh, Frank, and Luis are the only three buyers of gold in a small mining town. Their inverse demand functions for gold are as follows: Hugh: p=240.00-40.00 × Qu. Frank: p= 48.00-8.00 × QF. Luis: p= 12.00-2.00 × QL Se QH-QF, and QL are the quantities (in ounces) demanded by Hugh, Frank, and Luis, respectively.
News Analysis: Market Power and the EpiPen Consider the pharmaceutical company Mylan that produces epinephrine injection devices called EpiPens. In the presence of other firms producing substitutes for this good, the price of EpiPens is $150. Now suppose that competitors to Mylan no longer produce epinephrine injection devices, so Mylan now has pricing power in this market. As the economist on staff at Mylan, you are charged with the task of figuring out what your company's new pricing strategy should be. The following graph shows the marginal cost (MC), which is assumed to be constant, and the average total cost (ATC) of Mylan. The graph also shows the demand curve (D) for EpiPens and the marginal revenue curve (MR) once the firm has market power. On the graph, use the grey point (star symbol) to indicate the quantity of EpiPens demanded if Mylan continues to charge $150. Dashed drop lines will automatically extend to both axes. 1000 900 Q at $150 800 700 Profit Max 600 500 400 ATC at…
If a store increases its prices by 20% and its total revenue decreases by 10%, the demand it faces in this price range must be perfectly inelastic perfectly elastic inelastic unit elastic elastic Assume that the supply of corn is relatively price inelastic, while the demand for corn is relatively price elastic. If the government imposes a per-unit excise tax on the production of corn, the incidence or burden of the tax will fall entirely on sellers equally on both buyers and sellers more on buyers than on sellers entirely on buyers more on sellers than on buyers The absolute value of the price elasticity of demand for a good increases when the good has fewer substitutes the price of an input used to produce the good increases the good becomes a necessity consumers spend a greater portion of their budget on the good the good must be purchased as soon as the need arises (not possible to wait) O O O O
On the following graph, use the green point (triangle symbol) to plot the annual total revenue when the market price is $30, $45, $60, $75, $90, $105, and $120 per bike. 1280 1200 Total Revenue 1120 - 1040 980 880 800 720 640 560 o15 30 45 60 75 90 105 120 135 150 165 180 PRICE (Dollars per bike) According to the midpoint method, the price elasticity of demand between points A and B is approximately ▼ Suppose the price of bikes is currently $30 per bike, shown as point B on the initial graph. Because the demand between points A and B is a $15-per-bike increase in price will lead to in total revenue per day. In general, in order for a price decrease to cause a decrease in total revenue, demand must be TOTAL REVENUE (Dollars)
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